11/15/2006 @ 3:00PM

Wumart Abandons Stock Issue

Investors who took a slice of Wumarts share placement last week will get their money back. The stock, caught up in an apparent Beijing investigation of the companys founder, has not traded since it was sold on Friday, and late Wednesday the largest supermarket chain in China said it would terminate the offer.

What was puzzling was that
Wumart
specified that its board comprised Dr. Zhang Wen-zhong, Dr.Wu Jian-zhong, and Dr. Meng Jin-xian as executive directors. Zhang, the companys biggest shareholder, is thought to be under investigation by China, which is interested in determining the source of his wealth and the early finances of Wumart.

Earlier on Wednesday, Zhang unexpectedly resigned as chairman. Wumart appointed Wu who oversees human resources, to temporarily take over Zhang’s position, the Associated Press quoted Dow Jones as saying. It cited unidentified individuals familiar with the situation.

Wumarts stock was abruptly suspended after the company placed 101.31 million new shares at $6.60 Hong Kong (85 cents) each on Friday, raising net proceeds of $660 million Hong Kong ($84.6 million) to finance expansion of its retail network.

Hong Kong and Mainland media have reported that a major shareholder of Wumart is under the probe of Chinese government for a number of possible offenses involving property dealings. The authority is also scrutinizing the start-up funding of Wumart.

Wumart was founded by Zhang, a scientist and former government official who set up a company called Wumei, with the help of the municipal government, to run the first supermarket in Beijing in 1994

Although its stock has been suspended for three days, Wumart has not officially announced the reason, although the trading halt was called to give the company a chance to release price-sensitive information.